When Competitors Incorporate Your Name In Their Online Marketing: Tipsy Elves’ Approach May Provide Some Sobering Guidance

Internet advertising continues to present special legal challenges for trademark owners.  In particular, courts are still wrestling with the question as to whether an online advertiser may use a competitor’s name to promote a competing product.  Is it legal to use a competitor’s trademark in keyword searches and online advertising text through such platforms as Google AdWords?

Let’s imagine that you enter the name of your company–Bob’s Baubles—into a Google search box—just to make sure that those Google AdWords you paid Google for are working properly.  Yes, there’s your ad right at the top of the results list:

bobsbaubles.com – Bob’s Baubles® –Official – #1 in Baubles for every occasion!

AD www.bobsbaubles.com 555-555-5555

Buy fabulous baubles for every occasion from Bob’s Baubles!

Great!  Your ad is right at the top.  But wait a minute, what is that next ad that reads:

Bob’s Baubles – Every imaginable bauble – baublesandmore.com

AD www.baublesandmore.com

Large collection of fabulous baubles!

Who the heck are “baublesandmore” and how can they use the words “Bob’s Baubles” in their ad?

The answer:  they are your competitor, and they have paid Google Adwords for “Bob’s Baubles” as a keyword that will cause their advertising to appear more prominently in search results.

ow did this happen?  How does Google AdWords work?  In addition to the regular list of search results generated by Google’s proprietary algorithm, Google also displays as many as three paid advertisements.  Google’s AdWords advertising platform allows sponsors with AdWords accounts to bid on keywords that place their ads in a primary position above regular search results.

Google’s standard terms and conditions require that advertisers assume the responsibility for ensuring that their ad content does not violate any applicable laws.  Yet, at the same time, Google provides a keyword tool that actually populates “suggestions” that sometimes include third-party trademarked terms.  In spite of Google’s own research indicating that use of third-party trademarks might confuse internet users, Google has not undertaken any express policing role in the use of these trademarks in actual advertising text.

Google has been sued by trademark owners over 50 times in the last ten years, but trademark owners have rarely won, in part because, courts have accepted Google’s contention that it is the advertiser, and not Google, who is ultimately responsible for the legality of the advertisement.

As a notable, albeit limited, exception to the foregoing, the Fourth Circuit Court of Appeals in Rosetta Stone vs. Google, Inc. 676 F.3d 144 (4th Cir. 2012) refused to dismiss claims against Google for direct infringement, contributory infringement and dilution of trademark.  The relevant facts are as follows:

Plaintiff Rosetta Stone grew from a small, family-owned business in 1992 to a publically traded, industry leader in online language-learning products with almost 2000 employees.  Rosetta Stone owned and used several registered marks—ROSETTASTONE, ROSETTA STONE LANGUAGE LEARNING SUCCESS, ROSETTSTONE.COM, and ROSETTAWORLD—in marketing its products in various media including internet, television, radio, print and kiosks in public venues.  The Court noted that Rosetta Stone had a very high level of recognition in both the domestic and international language learning market.  Rosetta Stone had itself advertised via Google since 2002.

Rosetta Stone alleged that it suffered from considerable consumer confusion since 2009 when Google AdWords began allowing competitors to use third-party trademarks within advertising text.  Rosetta Stone presented evidence that not only was it likely that consumers would be confused by the use of their trademark in ads for other language-learning products, but that in fact consumers had been confused.  They reported 190 cases of counterfeit products being sold by competitors under the Rosetta Stone name in the first seven months after Google’s policy shift.  In addition, Rosetta Stone presented testimonials from five sophisticated, internet-savvy consumers who had thought they were buying Rosetta Stone products but instead bought counterfeits.  In spite of Google’s claims that confusion was unlikely, even two of Google’s in-house trademark attorneys, when shown search results for the keyword “Rosetta Stone”, were unable to determine which were links for authorized dealers of Rosetta Stone products.

The Fourth Circuit held that the trial court erroneously dismissed Rosetta Stone’s claims, finding that whether Google was liable for dilution of Plaintiff’s mark was a triable issue of fact.  However, as the case ultimately settled, there never was a final judicial ruling on the ultimate question of actual infringement by Google.

More recently, on May 2, 2017, Tipsy Elves, LLC filed suit in the Southern District of California against Ugly Christmas Sweater, Inc. (“UCS”), alleging that UCS had used Google AdWords to generate sponsored search results that included “Tipsy Elves,” for which the Plaintiff held a federal trademark registration in Class 25 clothing, as the lead phrase in the ad-captioning for UCS’ clothing products.  Here is the graphic from Tipsy Elves’ filed Complaint:

Tipsy Elves filed a dismissal without prejudice on June 16, 2017, suggesting that the case has now been settled, and perhaps bolstering the case for taking a more direct approach in addressing a competitor’s alleged infringing use of one’s mark.

So what can businesses do to protect themselves from online infringement?

  • First, it is highly advisable to procure one or more federal trademark registrations for your name and other valuable marks. Federal registration provides many procedural and substantive advantages, and lacking a registration often proves to be a non-starter when contacting third-party ISP’s and social media platforms.
  • Second, a business should seek to use its mark as widely and prominently as possible in a non-descriptive, branding fashion. This includes securing domain names and social media tags.
  • Monitoring the internet and social media is also important. Document any infringement on a regular basis.  One way to do this is by making and saving date-stamped screen shots.
  • Submitting a takedown request with a third-party host may be helpful in some instances.
  • That said, perhaps the most effective approach is the one taken by Tipsy Elves, namely, to contact an alleged infringer and press the matter directly.

Rob Monath, ww.robmonath.com, is a copyright and trademark attorney based in Raleigh, North Carolina. He helps his clients develop and protect online proprietary content.  This article is for general purposes only and is not intended as a source of legal advice.

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